In a move aimed at supporting the production of renewable hydrogen, the European Commission has approved a €158 million Polish measure to support LOTOS Green H2 sp. z o.o, a special-purpose vehicle owned by PKN Orlen SA.
The measure, which is in line with the EU Hydrogen Strategy and the European Green Deal targets, is expected to help end dependence on Russian fossil fuels and fast-track the green transition in line with the REPowerEU Plan.
Under the measure, LOTOS’s Green H2 project will produce renewable hydrogen through water electrolysis instead of through steam methane reforming using natural gas. This renewable hydrogen will be used in the fuel production processes in PKN Orlen’s refinery in Gdańsk.
The €158 million aid will support the installation of an electrolyser with a capacity of 100 MW, as well as the construction of a 50 MW photovoltaic power plant and 20 MWh battery storage. The electrolyser is expected to start operating as of 2027 and to gradually increase its production up to 13,600 tonnes of renewable hydrogen per year.
The project is expected to avoid the release of a total of 2.5 million tonnes of carbon dioxide over its lifetime. To maximize the reduction of greenhouse gas emissions, hydrogen will be produced solely with electricity generated from renewable sources.
The Commission approved the measure under EU State aid rules, finding that it supports the development of economic activity and key EU policy initiatives such as the European Green Deal and the REPowerEU Plan. The aid also has an ‘incentive effect’, as the beneficiary would not carry out the investments in renewable hydrogen production without public support.
The measure has a limited impact on competition and trade within the EU and is necessary and appropriate to promote the production of renewable hydrogen. The aid has sufficient safeguards to ensure that undue distortions of competition are limited, and the positive effects of the aid outweigh any potential distortion of competition and trade in the EU.
This measure is a significant step towards reducing greenhouse gas emissions in the energy-intensive and hard-to-abate refinery sector and is a strong demonstration of the EU’s commitment to achieving its climate targets while transitioning to cleaner energy sources.